Thursday, 19 October 2006
Question 1: To ask the Minister for Communications, Marine and Natural Resources the action he has taken, or proposes to take by way of legislation or otherwise, to address the issue of the apparent failure of the regulatory system as transposed into Irish law to meet its stated objectives in the wake of the disconnection of thousands of telephone and broadband subscribers resulting in damage to public confidence and business; if he or his office has been in touch with the relevant regulators prior to or since the decision to grant major price increases to both gas and electricity suppliers at a time when all international indicators were for a price reduction; if his attention has been drawn to the need to restore public confidence in the regulatory system by way of urgent investigation into the circumstances surrounding these events, the introduction of legislation, if necessary, or by directive to address the issues involved and to ensure against any recurrence; and if he will make a statement on the matter. [33833/06]
The telecommunications market in Ireland is fully liberalised and open. Statutory responsibility for the regulation of the electronic communication sector rests with the independent regulator, the Commission for Communications Regulation, ComReg, under the Communications Regulation Act 2002 and the Regulations transposing the EU Regulatory Framework for Electronic Communications Networks and Services. It is not, nor will it ever be, a function of the regulator to become involved in contract debt disputes between two companies.
As the Minister with responsibility for policy in the sector, I am concerned about the disruption and inconvenience caused to so many customers and I have asked ComReg to examine how, in light of the recent situation regarding Smart Telecom, this could best be prevented from happening in the future. All options will be considered, including legislation if necessary.
In the context of energy tariff increases, both the Electricity Regulation Act 1999 and the Gas (Interim) (Regulation) Act 2002, responsibility for the regulation of electricity and gas tariffs lies with the Commission for Energy Regulation, CER, which is the independent energy regulator.
The CER undertook a rigorous examination and consultation process in advance of publication of it decisions on the tariff increases. The CER has published its decisions in detail. Together with the Electricity Supply Board and Bord Gáis Éireann, the CER has made a full presentation on these deliberations to the Joint Committee on Communications, Marine and Natural Resources.
The scenario in early October that gave rise to cheap gas on the wholesale markets was atypical. Overall demand, including heating demand, was at a low level given the mild start to the autumn and supply levels were very high because the new Langeled pipeline from Norway was being tested at maximum capacity at a time when such flows were not needed. Long-term contract prices are more relevant to the cost of consumer energy bills than short-term day trading prices, as prevailed in early October. Despite some easing of gas prices in recent months the overall view of regulators, analysts and suppliers is that costs will remain high at least until next year.
The regulator has indicated he is open to reviewing tariffs should there be a significant and sustained downward trend in costs on the wholesale markets.
I thank the Minister for his admission and his willingness to take action regarding the outage in the telecommunications area. Will he elucidate further, with a view to setting a precise deadline and timetable to deal with that situation whereby innocent subscribers became the victims and where the delivery of services either was not properly anticipated or people were not made aware of negotiations taking place and were arbitrarily left without a service? Will the Minister give an undertaking that it will not happen again and that he will take the necessary action to prevent it?
I am concerned about the function of the regulator re gas and electricity price increases. The Minister should also be concerned about it. I presume he is aware that if this trend continues and these prices are left in place for the next 12 months, there will be large-scale loss of manufacturing jobs, in addition to jobs in the services sector, especially in the transport area. Is the Minister also aware that from last May the international indicators on energy prices clearly implied that production was up and that countless people were talking up the price of gas and oil? There was a reason for that.
Will the Minister give an undertaking to the House that before this goes further, he will order an inquiry into the information that led to the dramatic price increases in gas and electricity and will he relate that to the information which I know he has because he reads some of the same e-mails I receive? Will he carry out an examination of the impact on those industries that are now crying out for action?
Will the Minister order a further review of the price increases and the reasons therefor? If, for example, it is shown that there are good and compelling reasons for a reduction in the area, will he authorise it or order it, or would that require legislation?
The legislation that is in place gives responsibility for price increases to the independent regulator. The reason the legislation was put in place was to prevent interference from the political system in the price of gas and oil with the aim of ensuring a level playing field for anybody who wanted to enter the electricity and gas markets. We have gone down this route because of EU legislation and directives.
I agree with the Deputy that other options existed at the time which we might have taken, but we did not take them and we cannot reverse out of the one we are in at present. It is not open to me, as Minister, or to the Government, under the current legislation to direct the regulator in any way on prices. The regulator has spoken for himself. He came before the relevant committee, which I commend for taking action and requesting his presence, and he explained in detail how he arrived at his decision.
It is probably good from the point of view of soundbites to refer to immediately reversing the price rises, but that is not a realistic option. The price of oil and gas has increased substantially since this time last year. The Deputy is correct that the price has now begun to fall. Oil and gas are internationally traded commodities. BGE depends on imports from or through the UK for 86% of its supply. It would be a help if we had our own supply of gas.